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Tuesday, March 20, 2012

Public Higher Education Gets Less State and Local Support

The association of State Higher Education Executive Officers has published their report on "State Higher Education Finance FY 2011." The basic story is rising enrollments in public institutions of higher education, but falling per-student support.

The blue bars in the figure show educational appropriations for public higher education [per full-time equivalent student, adjusted for inflation. The support starts relatively high at $8,156 per student in 1987), sags in the early 1990s to $7,054 in 1993, rises again in the late 1990s and early 2000s as high as $8,316 in 2001, drops off in to $6,875 in 2005, rises to $7,488 in 2008, and now has dropped off to $6,290 in 2011.

Meanwhile, tuition revenue per full-time student is gradually rising. Overall, it rises from $2,422 in 1986 to $4,774 in 2011.

And over these 25 years, the number of full-time equivalent students in public higher education has risen from about 7 million back in 1986 to almost 12 million in 2011.

Put these together, and here's tuition as a share of public education total revenue, rising from 23.2% back in 1986 to 43.3% at present.

This pattern may be here to stay. As the report states: "In the past decade these two recessions and the larger macro-economic challenges facing the United States have created what some are calling the “new normal” for state funding for public higher education and other public services. In the “new normal” retirement and health care costs simultaneously drive up the cost of higher education, and compete with education for limited public resources. The “new normal” no longer expects to see a recovery of state support for higher education such as occurred repeatedly in the last half of the 20th century. The “new normal” expects students and their families to continue to make increasingly greater financial sacrifices in order to complete a postsecondary education. The “new normal” expects schools and colleges to find ways of increasing productivity and absorb ever-larger budget cuts, while increasing degree production without, we hope, compromising quality."

I would add only a couple of thoughts:

1) Almost everyone believes, or claims to believe, that the economic future of the United States is intertwined with building greater human capital. But that isn't reflected in our spending choices. I'd be the first to say that spending isn't everything--but it's something! Here's a post from July 19, 2011, on "How the U.S. Has Come Back to the Pack in Higher Education." The U.S. used to be the world leader in share of population going to higher education, but no longer.

2) The main budgetary mechanism for encouraging additional higher education is using student loans. This avoids adding to direct spending for higher education, but places a greater share of the risk of not completing a degree, or not having the degree lead to a well-paid job, on the student. Also, public higher education isn't expanding fast enough to absorb those who want to try college, so many of those who receive these loans are headed to the for-profit educational system. Here's a February 23, 2012, post on "For-Profit Higher Education."